RICS UK Red Book 2018 Consultation Draft

A New UK RED BOOK is on its way

On 5 June 2018 RICS released the consultation draft of the revised UK Valuation Practice Standards. These supplement the global standards that became effective last year. They contain a few additional requirements and a significant amount of guidance for RICS valuers practicing in the UK. There was also a parallel consultation on a revised Guidance Note on Depreciated Replacement Cost.

The short period allowed for comments has expired. We reviewed both consultation drafts in detail and submitted comments to RICS. These can be viewed by following the links on this page. In summary:

Positives:

The relationship with the global Red Book is more clearly explained, it now being clear that the UK Professional Standards supplement the Global standards.

The distinction between mandatory rules and advisory guidance is now more clearly made. Most of the material is now clearly labelled as guidance.

Negatives:

The current rule in the Residential Mortgage Specification that a valuer MUST not advise on loan terms has been changed to indicate valuers MAY provide such advice. This may be an unintended consequence of changing the status of the Specification to that of a Guidance Note, but it risks blurring the responsibilities of the valuer and the distinction between information and advice that has been a principle of professional liability since the HoL decision in the SAAMCO case over 20 years ago.

The guidance on financial reporting includes too many directions that the valuer should agree accounting policies with the client and or its auditors. This is NOT the role of a valuer. The few RICS members who are accounting experts may be competent to fulfil such a role, but this is not a matter that it is within the RICS's remit to regulate.

In spite of the increased clarity in the introduction about the relationship between the UK and Global Red Books, the distinction is less clear in many of the proposed UK VPGAs which provide guidance on matters of global relevance as well as UK specific material.